John Chen seems to be exactly the dose of medicine that BlackBerry needed to get things moving in the right direction again. He's only been CEO for about 7 months but his mark is everywhere, and I mean that in a good way. If you don't have time to read all the details let me just say this: BlackBerry has gone from being a company that I thought might not have enough cash to stay alive to seeing some light at the end of the tunnel. If enough enterprise customers start to realize that BlackBerry will continue to be around as the trusted leader in enterprise mobility management, then I think the company's future looks a whole lot better.

I think we all have to realize that BlackBerry isn't in the running to compete (on volume) with Apple, Samsung or even (at least for now) Microsoft's hardware numbers. But there are still groups of enterprises that prefer the security and reliability that BlackBerry offers, and the company is expanding with BBM services to reach consumers and enterprise users who aren't using BlackBerry hardware. There is a definite opportunity here even if we must concede global defeat in the device market.

Financially speaking, BlackBerry's Q1 results showed a lot of improvement over last quarter. Here are the highlights:

Revenue was $966 million, down only $10 million from last quarter or 1%. To me this is a good sign. Revenue isn't really declining any more. Let's hope the trend continues to improve.

Gross margin climbed to 48% compared to 43% last quarter. This rise in margin comes despite more revenue recognized from devices, which is a lower margin business compared to services. Specifically, BlackBerry recognized revenue on 1.6 million devices in the quarter versus 1.3 million last quarter.

The number of BlackBerry 10 devices that sold through to end customers appears to have risen to about 1.7 million versus 1.1 million last quarter. (Note: I'm pretty sure they said 65% of devices sold to end customers were running BB10, not 65% of the units they recognized revenue on, but I'll double check when the transcript is available and update this post if necessary)

Cash climbed to $3.1 billion, up from last quarter's $2.7 billion. This was mostly the result of a tax credit and real estate sales, but it's a welcome improvement since it buys them even more time (which they may not even need) to execute on Chen's turnaround plan.

Operating expenses dropped another 13% from last quarter. When you combine this with the improved gross margin I mentioned above you can see how this company is pushing much closer to break-even.

Chen practically promised to be cash flow positive by the end of the current fiscal year (which ends next February). He only backed off on the word "promise" because it's not one of the words covered by the forward looking statements disclaimer. You have to love how straight forward this CEO is.

Cash burn was $255 million when you adjust out the real estate sale and tax refund.

While it's nice to see the cash burn decline, it's still a run rate of a billion dollars per year, so for the company to get to cash flow break-even they have to add almost a billion dollars of gross profit to the annual figure. If most of what they add is extremely high margin service revenue then it will be easier. They also have a bit of a buffer built-in because some of the hefty fees they've been paying because of IP licensing deals will go away soon. That will create an immediate improvement in cash flow. For example, out of the $255 million cash burn this quarter a whopping $142 million came from purchases of intangible assets (mostly IP). That's the line item that should dry up a lot this year.

All things considered it seems like BlackBerry is now on a much more solid financial footing and has a hefty rollout schedule heading through the fall. They confirmed that the devices business will be profitable at 10 million units per year. If BlackBerry 7 drops to zero they'll need about a 50% lift in BlackBerry 10 units sales to reach this target. Given the new focus on lower cost products like Jakarta, they should be able to do this (or really … they'd have no business being in the hardware game at all.)

Way to go BlackBerry. The stock is up almost 12% so far today and it's a well deserved rally.

I rememeber last year discussing in the forums and we were saying BB needs about 10milion phones/year sales in order to succeed. Chen has something TH never had... clear vision coupled with comunication of that vision, based in numbers.

He is a pragmatic CEO, hands on and knows his business. What he has accomplished that far is really something to give him credit for. On the other hand, having less bad news than expected is not a win, but it surely is some good wind in the sails; That does not win one the race for sure, as it depends on how that wind is taken advantage of.

Chen creates the basis and conditions and up to now proves that he then executes on them, so he seems to be in essential control and with clear strategy and awareness. He inspires confidence and I say, if BB makes it out of the storm, it will largely be because of all this. Good job Mr Chen. Keep at it!

Cannot wait to see Feb call, this is where it all clears out! Hope for the best and looking forward to getting my hands on a passport!

@ Chris Umiastowski. I think CFO said the 65/35 split for BB10/BBOS was for the "recognized number" ie sell in. Does any body know out of the 2.6m sold through, how much was BB10? It seems they didn't answer that on the call

I think Chen isn't the BlackBerry savior the article predicts. However he is a CEO In a chain of CEO 's that is turning things around. Just hope they don't settle for being the bargain basement company hoping the masses in third world countries are going to save them. I love my z10 and looking forward to my 4th BlackBerry phone in the future whenever they come out with something more astonishing... haven't seen it yet.

As long as Blackberry continues to innovate they will rebuild their name and become a major player in the top 3. Blackberry offers a value that no other device manufacturer can offer, or are willing to offer. Right now Blackberry offers devices that have better specs than the competition, and their BB10 OS is evolving into exactly what BlackBerry users want. While Apple wants to keep their consumers stupid, Blackberry has created a grassroots effort to reach out to their consumers, include them, educate them, and provide the tools that people need.

Thanks a lot a Chris. And will done BlackBerry team, well done Mr. Chen! It might be a bit bumpy road throughout the 2nd half of the year but hang on tight people, Captain JC is here! We will get out from this iceberg soon!

Good news, but in the US, a significant number of New York State government workers are being moved off the BlackBerry platform and to iOS
New York is a large state. That is a lot of BlackBerry users they are losing. Security is taking a back seat in this move. Even with governments, reliable and secure aren't always enough.

It's amazing......almost a billion dollars in revenue and people say BlackBerry is dead! No BlackBerry was being financially irresponsible under the prior leadership. They just spent money uncontrollably with the belief that sales would save them. It doesn't work that way. Yes drive sales, but expenses always have to be lower. Continued quarterly and yearly losses are like hiring your own negativity campaign for huge bucks. I have said it all along. The best advertising BlackBerry can do is to turn a profit, and show a positive cash flow/growth. I truly believe now BlackBerry is on the right track under John Chen. The healing process between BlackBerry, the consumer and even the media can begin. John needs to show positive cash flow within a few quarters. Companies, governments, and even the consumers are waiting to hear that it's official........BlackBerry is back and is here to stay for the foreseeable future. Sales will then skyrocket!

Alot of people are forgeting how long it takes to implement BES 10 in a corporation. Husky just moved over to BES 10 and the conversion from Iphone to Z10's are remarkable. Just from a personal observation I was in a meeting with 20 some people (mostly managers) about 4 or 5 months ago and about half had Iphones, a quarter had legacy BB and 1 quarter had android. But whats funny is half of the iphone holders had personal z10's. Just went to another meeting a couple weeks ago with most of the same people and a good quarter of the people had Z10 or Q10 phones now. Obviously not statiscal but still eye opening.

As I read it..... the cash climb to 3.1 billion dollars from 2.7 billion dollars was 'excluding' a receipt of a tax refund of $397 million and proceeds on the sale of real estate of $287 million Correct me If I am wrong but if it is so it is quite healthy I think.... still a billion dollars or so cash burn a year is definitely a point of concern when there is thick cloud of uncertainty about BBRY hanging on

No. Cash balance is inclusive of the real estate sales receipts and tax return but also the expenses associated with downsizing the employee count. Net result of that plus the revenues and expenses of on-going businesses adds up to the increase in cash. Taking out those three one time items results in a cash burn of about 250 million. Better, but not long term sustainable yet.

I don't think BlackBerry has to concede defeat in the global device market. They just have to market their devices. As good as this news is, imagine how much better it might be if they had a solid marketing campaign in place. I still run into people who didn’t know BlackBerry was making phones still. Hell, I still run into people who didn't know BlackBerry had a tablet.

Good post. Things are coming together. New appealing devices, a good strategy on android with Amazon and 10.3 to be released in the fall. Get the advertising strategy together and finally BlackBerry could have a big black Christmas. Finally. All the berries are lining up. Nice.

I myself have never been on the side of the doomsayers, and knew things take time. The lack of advertising was and is good, keep the cash, so they can launch once all the new amazing products and services have left the kiddie disease state and are finally RTM* ready

The market is still being extremely cautious. Based on these "light at the end of the tunnel" numbers, it should be up 22%. These are great numbers that show definite signs of recovery after the huge mess the previous CEO left the company in. That CEO also took away $55M from the balance sheet. It's a shame how those folks get away with this sort of thing on the backs of investors!

I'm not surprised by the good news. There was a lot of positive news scattered over time throughout the quarter. It would have been more of a shock, to me, if the results were Negative. I expected to hear that they were officially headed in the right direction, and that they are.

Adding visibility about near and mid terms is mandatory for Chen and BlackBerry.
In the enterprises world, where investments are made to last at least 3-5 years, tone was cautious about engaging in business with BlackBerry. Both their "on the road - 1 to 1 meetings" with the commercial hat and these Q figures makes it tangible now.

Chris, I share your thoughts ... almost ;)
I'll rephrase one line : "Finally some light at the end of the tunnel"; we're closer than that; it's not the halo of the light we see, it is the end of the tunnel, right after a - still long - straight line.

It's never over. Companies always have to work on products and sales. What we're looking for is for the company to get back into profitability. That will quite likely happen in Q4 based on what Chen has been doing. We can see significant progress from Q3 numbers last year.

How can be taken as positive news? They only sold 1.3 million units in a Quarter? That's not a day, a week, a few weeks, but an entire quarter. That's horrible, and there is no way around it. I won't be long before they are out of the hardware business... and that hideous Passport isn't going to make a dent. Seems like Blackberry wants to be Android so bad, come out with an Android phone already...

It's a 55% increase in sales on BB10 handsets as far as I can make out quarter on quarter. That IS something to shout about. Low numbers yes, but if growth like that is sustained over any period of time it becomes quite meaningful.

Glad they're finally ditching the old BB7 devices and pushing BB10 sales with devices like the Z3. Now I want to see what premium full touch screen BlackBerry Chen has in the queue for early 2015. I have money in my pocket for one of these.

Let's wait to see how the other news outlets report on BlackBerry's results. While they are improved from the worst quarters, they're still not back in the black. I think many outlets will happily continue to bash BlackBerry and position it as a company on the outs...which is sad.

THIS IS GOOD NEWS BLACKBERRY!.. MR JOHN CHEN YOU THE "MAN OF THE YEAR" YOU ARE BRINGING THIS COMPANY BACK! I DON'T CARE ABOUT i-PHONES SAMSUNG OR THE REST. I GOT THE BLACKBERRY FOR IT'S SECURE SIGHTS ON E-MAILS TEXTING OR ON BBM! GREAT WORK TO YOU AND TO ALL YOUR CREW AT BLACKBERRY!

Did they mention how many of the written down Z10's were included in revenue but not in cost? As these dry up and sales of new devices kick in I expect the hardware margins to come back down again from their lofty heights.. Regardless, let's take the good news now and use the positive momentum to make up for it.

Some guys get hired solely for the purpose of doing the dirty work so another guy can come in and move things forward; it's their "gift" and it's what they do well . . perhaps that was Thorsten's purpose and if so he did it well and now Mr Chen can (and is) moving it forward.

You really shouldn't get too hype for Manitoba yet. As many rumors as there is that it's a high-end device, there's just as many that it's an 'all access' full touch device. What does that mean? It means there's a good chance it's just nothing more than the Z3 LTE. People just choose to ignore that rumor and stick with the it being a high-end device rumor.

You are right.
I think many understand or await this very "full touch high specs" BlackBerry phone.

But I'm looking forward knowing much this passport device, this special keyboard and this OS 10.3.

I also hope we will finally get an access to a decent music store via Amazon in Europe as we've never had the chance until now to experience it on a BlackBerry device. This is pretty though and I'm sure this is contributing to the leak in the user base.

I know Chen will focus on Enterprise and I thank him as I am managing my fleet in an highly regulated business.

Users like me would love to have smooth and powerful dual Sims smartphones with a BES environment, a nice screen to work with, secured access to our servers and confidential chats with an ability to store the critical ones for legal reasons.

But damn I would also like to download an album while i'm in a distant country in a hotel room, directly from my phone without the use of a laptop or whatsoever to link it...like iTunes...

And finally be able ditch my second (i)phone because my suits looks better with their internal pockets almost empty!
And I hate having to admit that they beat BlackBerry hands down when it comes to make your consumer life (far more) easier.

Long live to the new Chief Editor, and hope Chris will understand too.

Yep, Chen might actually manage to make matters worse than he has if he lets expectations for a rumored, nonexistent device, dampen demand for the "Passport."

Totally curious that no one at BlackBerry is criticizing Chen for announcing the new devices to cover his numbers today even though (a) it's months before scheduled release and (b) it was the same day as Amazon was set to capture all the mindshare with the announcement of their Fire phone.

I thought the results were just OK, nothing to go crazy over. They STILL cannot seem to sell handsets and their regulated business core future, based around BES10/12 doesn't seem to be taking off as one would have hoped. That said, there's no doubt we're seeing a more tactical CEO, that plays the quarter-end game very well. All the announcements leading up to the results all helped to frame the numbers quite positively. Show's how much of an amateur TH was.

Well, it stopped the trend of bad news being shared every quarter. We got used to being prepared for bad news only to learn that the news was worse than what we thought. I think that's why there was such excitement over the call.

Regarding the article and results, I was very pleasantly surprised, as in sure many were, with the results this morning. Unfortunately I wasn't able to listen to this morning's call due to a work obligation, I'm very curious to hear everything JC had to say, and to see how the company continues to evolve. There has been a lot of positive press around BlackBerry this morning which is a welcome change. Thanks for laying out these details for us.

I think that's cash reserves not cash flow and he did that mainly by selling real estate at a loss. He still doesn't have the company as healthy as Heins had it at this point last year.... And, he still doesn't seem to understand that BlackBerry doesn't mean jack without a healthy device business.

Listen to them rattling on about how the company is moving to enterprise and software (as they have all been recommending), conveniently forgetting that they're launching phones all over Asia, and have a device portfolio that is expanding this fall.

John Chen is bright enough to realise that it is image that is important. Not reality.

If he can change perceptions (just check out Chris article), then he has a chance of turning the company around.

That's the key difference with Heinz. Heinz knew what was required - he just couldn't persuade the markets he knew what was required.

CIO's watch and read the financial media. They're complete sheep who rarely know much about technology. Chen appears to be succeeding in changing the view of the image makers. They will change the view of the CIO's.

I agree with blackberryfan777. The enterprise is dead. It's a niche market for Gov't, defence contractors, law firms, etc. Nobody else cares anymore. Focus on security for EVERYBODY and selling handsets. Focus on populating native apps, gift cards, ads that talk about security built into the phone, etc.

I'm also curious on how BB will evolve. I'd like to see, in simple format, how the results would have been without layoffs and cost cutting measured all included, and how they plan to grow in the future if they are still seeing declining sales (which means less money, right?). I know Chen wants to focus on business customers and BBM, but I'm not too sure how well that effort is going.

At 11:50 EST (6/19) the stock is trading at USD$9.20, up about two dollars from a week ago.
This is good news for share holders who were willing to wait for these results. The share price is now above the $8 that had been offered in the buyout from last year.

Revenue should remain level for the near future. There are many new Enterprise servers on trial and there has been no push for handset sales (except Indonesia). Secondary revenue from software for autos and healthcare are long into the future.